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Home / Business / Trump's company could save millions if interest rates fall to its liking

Trump's company could save millions if interest rates fall to its liking



President Trump Will Save Millions of Dollars on Interest Annuaring Pending loans to his hotels and resorts when the US Federal Reserve lowers interest rates, according to public filings and financial experts.

In the five years before he became president, Trump borrowed more than $ 360 million through four loans from Deutsche Bank for his hotels in Washington, DC and Chicago as well as for his 643-room Doral Golf Resort in South Florida.

Payments for all four properties vary according to Trump's official financial statements. This means he has already benefited from falling interest rates, some of which were triggered by the Federal Reserve's reduction in more than a decade announced in July – and his payments could drop several million dollars annually if Trump's central bank trumps it. s wishes and lowers short-term interest rates further, experts said.

"It will cut its borrowing costs significantly if it gets what it wants," said Phillip Brown, a finance professor at Kellogg School of Management at Northwestern University. According to Braun, Trump's savings could be even greater if Deutsche Bank allows its company to repay loans faster without a penalty, which banks sometimes allow.

The White House and the Trump organization did not respond to requests for comments.

While Trump's adult sons, Donald Trump Jr. and Eric Trump, run the family business, the president insisted on retaining ownership of his company at his option, disobeying the practice of past presidents. This decision, ethics experts warned, would lead to potential conflicts of interest between his personal interests and public policy goals.


Trump's company raised $ 125 million to buy and renovate Doral Golf Resort in Florida. (Angel Valentin / For The Washington Post)

The Trump administration has argued that lower interest rates would cause more consumers to buy homes and cars and invest companies in new factories. Lowering rates also usually lower the value of the dollar, making US products cheaper for foreign buyers, a goal of the president.

However, most economists and business leaders say Trump's trade war is the biggest threat to the economy, not interest rates. which are already at historically low levels.

Since taking office, Trump has been aggressively trying to lower interest rates and rejected the largely open-ended approach that other presidents have taken to the Fed. Last year's post – due to disagreement.

After Powell announced no rate cut on Friday and instead expressed concern over Trump's trade war with China, the president immediately attacked him on Twitter and wrote: "Ace The Fed has done NOTHING! "And [Powell] compares with Chinese President Xi Jinping.

"My only question is who is our bigger enemy, Jay Powell or Chairman Xi? [194] 59031] Trump posted .

Trump and his advisors have privately discussed creating a rotation among Federal Reserve governors that would reduce Powell's influence, the Washington Post reported last week.

Friday night by reporters asked if he wanted Powell to resign, and replied, "If he did, I would not stop him."

The central bank's interest rate is a factor in determining the interest rates on adjustable rate loans that the president has for his loans properties. Mortgage rates have also declined due to the trade war with China and concerns about global growth.

Experts said it was difficult to determine exactly how much Trump would save if he received the short-term interest rate cut he demanded, from 2.25 percent to 1.25 percent – a step normally taken for economic emergencies is reserved.

However, the president would be significantly affected by a rate cut.

Starting in 2012, Deutsche Bank will provide Trump's companies approximately $ 364 million

The bond covered two loans totaling $ 125 million to buy and sell Doral Golf Resort in Florida Renovate ($ 170 million) loan for the renovation of Washington's Old Post Office Pavilion into a Trump hotel and $ 69 million loan to refinance an existing Trump hotel in Chicago.

Trump's Financial Information and Loan Records indicate that all four loans are still pending. His company has reportedly paid back at least $ 19 million of the loan from Chicago, although the documentation does not show the balance for any of the properties.

Trump saved at least $ 600,000 and so much According to Clifford Rossi, a professor at the Business School of the University of Maryland, only $ 1.1 million a year for the larger of the two Doral loans, if the Fed ever according to credit agreement, a reduction of one percentage point.

Even a Quarter Point A reduction that most Wall Street investors now forecast for mid-September could save Trump up to $ 275,000 a year on this single Doral loan.

"If you're a consumer borrower with a car loan or a credit card, a quarter-point reduction means significant savings," said Rossi. Trump "has more credit and a larger dollar rate, so he would certainly achieve a greater reduction in the amount owed than most Americans."

Bloomberg News analysis showed Trump could save for every one-quarter cut Annual interest payments of $ 850,000, which would mean an annual saving of more than $ 3 million if the Fed cut interest rates by one full Lower percentage point, as Trump has demanded.

During his time as a real estate developer, Trump was famed for his aggressive efforts to save money, even when it came to breaking ties or breaching professional standards.

Trump has been sued for non-payment of bills dozens of times. by contractors, bartenders and even his own lawyers. He used money from a non-profit organization to make legal settlements for his for-profit business. He once sued his own lender, the Deutsche Bank, to get out of a large mortgage.

Before Trump entered politics, he often advocated lower interest rates that are critical to a company that relies on high debt.

"Interest rates are crucial to the real estate industry, and [Trump has] spent his entire career there, so he has strong ideas about where interest rates should be," said James Bullard, president of the Federal Reserve Bank of St. John. Louis. "Every real estate agent I've ever met in my life has always wanted lower interest rates. I think that's part of nature. "

In the 1980s, Trump became one of the most aggressive borrowers in The country used cheap credit to fund a casino empire in Atlantic City that ultimately failed and forced four of its companies to file for bankruptcy.

After this collapse, Trump was largely frozen by major banks. He used cash to finance much of his company's recent real estate expansion and, starting in 2012, turned to a large-scale loan from an increasingly risky Deutsche Bank, as the Post reported earlier.

Democrats in Congress have summoned his German bank records, but Trump sued to keep the bank from reacting and the matter gets stuck in court.

Former presidents have avoided publicly criticizing the Fed to maintain the Bureau's isolation from politics. Trump decided otherwise from the beginning and escalated his already routine attacks on Powell, chirped at various times in July, as global economic concerns increased in recent weeks that "the Federal Reserve has no idea! "And" you raised interest rates too early, too often, and exacerbated them, while others did exactly the opposite. "

Four former Fed leaders, appointed and reelected jointly by six presidents, then released a Wall Street Journal that the Fed" is free from short-term political pressure and, in particular, without the threat of removal or downgrading of political leaders Reasons "may act.

Trump stepped up the pressure on Friday after Powell's speech at a meeting of central bankers in Jackson Hole, Wyo. The chairman said the US economy is in a "favorable location," but the trade war Trump launched against China created a "complex, turbulent" situation.

Trump responded with a tirade on Twitter blaming China for a cargo of problems and demanding that US companies should not do business there. Stock market investors, already fearful of a shaky bond market and faltering consumer confidence, began a sell-off that led to significant market losses.

Northwest Professor Braun said Trump's continued pressure on the Fed's presidency and his colleagues to adjust interest rates to the president's preferences could hurt the US economy.

"I do not think the Fed should accommodate Trump's trade war, and the risk is the potential inflation and the Fed's reputation in the future," he said.


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